This conference focuses on the question of how rapidly emissions should be reduced. But if that question is to be of more than academic interest, it must be set in the current political context, in which the largest emitter of greenhouse gases refuses to adopt the current emission target levels, and the developing world, which will be contributing more than 50 percent of the world’s emissions by 2020, has not even agreed to voluntary emission reduction commitments.

To motivate the discussion of both the timing and magnitude of emissions mitigation policy, the paper begins with an overview of the underlying science and economics. Understanding the uncertainties and differences in the timing of costs and benefits of climate change mitigation helps frame the extensive discussion of political economy issues that we examine in the second section. Specifically, we explore the interaction of economic and political concerns in enforcing emissions commitments and encouraging developing country participation within the “voluntaristic” framework entailed by the current system of global governance. Given these political economy constraints, in the third section we evaluate the Kyoto Protocol and alternative formulations to climate change policy.

We conclude that modifications to the Kyoto framework are required to advance the effort to address climate change. At the very least, a thorough re-examination of alternative frameworks may prove helpful in building a global consensus behind a more effective strategy. The final section concludes with a discussion of one promising approach to addressing climate change: a flexible hybrid system that combines a permit trading program with the ability of governments to sell additional permits at a given maximum price.

It is important to note that our preferred approach does not necessarily involve less aggressive global emission reductions in the short run than called for under the Kyoto Protocol. Rather, the approach is intended to provide a mechanism for ensuring that short-run emission reductions are politically viable, by including economic and political protections against unexpectedly high costs. Indeed, by improving the political viability of emission reductions, the hybrid system could play a crucial role in beginning the process of addressing climate change in the long run.